Aristotle Capital Boston
Small/Mid Cap Equity

Strategy Overview

  • Investment objective is to maximize long-term capital appreciation while mitigating risk relative to the benchmark over multi-year periods
  • Diversified, quality-oriented portfolios managed with a long-term time horizon
  • Contrarian approach seeks to identify companies with low market expectations and a high probability of fundamental improvement that are trading with attractive upside potential and limited downside risk
  • Portfolios consist of companies that we believe can create shareholder value and possess quality management teams, attractive industry dynamics and strong or improving financials
  • Fundamental, bottom-up approach to security selection, typically investing in stocks within the market capitalization range of the Russell 2500 Index at the time of purchase


Investment process includes the following tenets:

  • Experienced Team: The research team consists of six individuals averaging over 20 years of industry experience.
  • Long-Term Approach: We conduct bottom-up, fundamental research to identify quality-oriented businesses.
  • Depth of Research: We believe the overall depth and quality of information gathered leads to a more robust platform

Strategy Inception Date: January 1, 20081

Assets: $1,192.4 million (as of 6/30/2023)

Holdings: 80-120

Benchmark: Russell 2500 Index

Cash: Typically less than 5%

Annual Turnover: Typically 20% – 30%

Sector Weights: Maximum +/- 10% versus benchmark

Vehicles Offered: Separate Account; Collective Trust

Individual Position Size: Maximum 4%

As of: 6/30/2023


Trailing (%) QTD YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs Since Inception1
Small/Mid Cap Equity Composite (Gross) 1.18 2.27 8.03 11.97 4.06 8.92 8.62
Small/Mid Cap Equity Composite (Net) 1.04 1.98 7.46 11.40 3.56 8.30 8.04
Russell 2500 Index 5.22 8.79 13.58 12.29 6.54 9.37 8.41
Calendar Year (%) 2022 2021 2020 2019 2018 2017 2016
Small/Mid Cap Equity Composite (Gross) -12.05 18.50 10.23 23.73 -10.22 13.98 22.73
Small/Mid Cap Equity Composite (Net) -12.52 17.93 9.71 23.25 -10.55 13.24 21.89
Russell 2500 Index -18.37 18.18 19.99 27.77 -10.00 16.81 17.59
1TThe Aristotle Small/Mid Cap Equity Composite has an inception date of January 1, 2008 at a predecessor firm. During this time, Dave Adams and Jack McPherson had primary responsibility for managing the strategy. Performance starting January 1, 2015 was achieved at Aristotle Boston.
Past Performance is not indicative of future results. Performance results for periods greater than one year have been annualized. Returns are presented gross and net of actual investment advisory fees and include the reinvestment of all income. Gross returns will be reduced by fees and other expenses that may be incurred in the management of the account. Net returns are presented net of actual investment advisory fees and after the deduction of all trading expenses. Please see important disclosures at the bottom of this web page. Effective January 1, 2022, the Russell 2500 Value was removed as the secondary benchmark for the Aristotle Capital Boston Small/Mid Cap Equity strategy. Non-fee-paying accounts represented less than 5% of the SMID Cap Composite assets from December 31, 2010 to December 31, 2013. As of December 31, 2014, there were no non-fee-paying accounts in the Composite. In instances where non-fee paying accounts were included in the SMID Cap Composite, the highest model fee was applied to recalculate the net returns for composite purposes and the impact on the since inception return of the composite was deemed immaterial.


  Small/Mid Cap Equity Russell 2500
Number of Holdings 102 2,503
Active Share (%) 94.3
Turnover (1 Yr, %) 5.0
Dividend Yield (%) 1.1 1.6
Wtd. Avg. Market Cap ($B) 6.2 6.3
Price/Earnings (NTM) 16.0x 14.5x
Price/Book Value 2.1x 2.1x
Forward EPS Growth (5 Yrs, %) 10.7 12.7
Return on Equity (%) 12.9 12.0
Debt/Equity (TTM) 1.1 1.9

The Portfolio Characteristics shown are based on a representative account. Please see important disclosures at the bottom of this web page.

Market Cap Breakdown (%)

Portfolio Risk/Return Statistics

5 Years Small/Mid Cap Equity Russell 2500 Index
Annualized Alpha (%) -2.21
Beta 0.99 1.00
Standard Deviation (%) 23.57 23.19
Information Ratio -0.49
Sharpe Ratio 0.11 0.21
Tracking Error (%) 5.10

Top Ten Holdings (%)

Dycom Industries 2.4
Merit Medical Systems 2.3
FTI Consulting 2.3
Acadia Healthcare 2.3
Belden 2.2
Huron Consulting Group 2.0
Advanced Energy Industries 2.0
MACOM Technology Solutions 2.0
Gartner 1.9
AerCap Holdings 1.8
Total 21.2

Sector Weights (%)

Sources: SS&C Advent, FactSet, Russell Investments, eVestment
The Top Ten Holdings and Market Cap Breakdown shown are based on a representative portfolio within the Aristotle Small/Mid Cap Equity Composite. The Portfolio Risk/Return Statistics shown are based on the Aristotle Small/Mid Cap Equity Composite (the Composite). The Sector Weights shown are based on the representative portfolio within the Aristotle Small/Mid Cap Equity Composite. The representative account was chosen since, in our view, it is the account within the Composite that most closely reflects the portfolio management style of the strategy. Not every client’s account will have these exact characteristics. The actual characteristics with respect to any particular client account will vary based on a number of factors, including but not limited to: (i) the size of the account; (ii) investment restrictions applicable to the account, if any; and (iii) market exigencies at the time of investment. You should not assume that any of the securities transactions, sectors or holdings discussed in this report are or will be profitable, or that recommendations Aristotle Capital Boston, LLC (Aristotle Boston) makes in the future will be profitable or equal the performance of the securities listed in this report. There is no assurance that any securities, sectors or industries discussed herein will be included in or excluded from an account’s portfolio. Aristotle Boston reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. This is not a recommendation to buy or sell a particular security. Recommendations made in the last 12 months are available upon request. Past performance is not indicative of future results. The Russell 2500® Index measures the performance of the small cap to mid cap segment of the U.S. equity universe. The Russell 2500 Index is a subset of the Russell 3000® Index. It includes approximately 2,500 of the smallest securities based on a combination of their market capitalization and current index membership. The volatility (beta) of the composite may be greater or less than the benchmark. It is not possible to invest directly in this index. Composite and index returns reflect the reinvestment of income. Composite returns are presented gross and net of actual investment advisory fees. Returns are presented net of trading costs. Net returns reflect the additional deduction of management fees and are based on the actual accountlevel net returns. Performance is expressed in U.S. dollars.

All investments carry a certain degree of risk, including the possible loss of principal. Investments are also subject to political, market, currency and regulatory risks or economic developments. International investments involve special risks that may in particular cause a loss in principal, including currency fluctuation, lower liquidity, different accounting methods and economic and political systems, and higher transaction costs. These risks typically are greater in emerging markets. Securities of small- and medium-sized companies tend to have a shorter history of operations, be more volatile and less liquid. Value stocks can perform differently from the market as a whole and other types of stocks. The material is provided for informational and/or educational purposes only and is not intended to be and should not be construed as investment, legal or tax advice and/or a legal opinion. Investors should consult their financial and tax adviser before making investments. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Information and data presented has been developed internally and/or obtained from sources believed to be reliable. Aristotle Boston does not guarantee the accuracy, adequacy or completeness of such information.

Active Share is a measure of the percentage of stock holdings in a manager’s portfolio that differ from the benchmark index. Turnover is calculated by taking either the total purchases or total sales of portfolio securities (whichever is less), over a particular period, and dividing it by the monthly average market value of the portfolio during that period. Dividend Yield is the ratio of a firm’s dividends each year relative to its share price. Weighted Average Market Capitalization is a dollar-value measurement of the size of companies in a portfolio or index. In such a weighting scheme, an average figure is derived from the market capitalizations of each company (their market prices multiplied by the number of shares outstanding) multiplied by their weights in the portfolio or index. Price to Earnings is the ratio of a firm’s closing stock price and its trailing 12 months’ earnings per share. Price to Book is a ratio used to compare a stock’s market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter’s book value per share. Forward EPS Growth is the percentage increase or decrease in the next five years’ earnings estimates compared to current year’s earnings estimates. Return on Equity is the amount of net income returned as a percentage of shareholders’ equity. Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested. Debt to Equity ratio is used to measure a company’s financial leverage, calculated by dividing a company’s total liabilities by its shareholders’ equity. The ratio indicates how much debt a company is using to finance its assets relative to the amount of value represented in shareholders’ equity. Annualized Alpha is the measure of risk-adjusted excess return over the style index. Beta is used to measure market risk. It is defined as the average relationship, over time, of the portfolio’s rate of return to the style index. Standard Deviation is a measurement of risk or variability of returns over time. Higher deviation represents higher volatility. Information Ratio is a measurement of returns above the benchmark (usually an index) relative to the volatility of those returns. Sharpe Ratio is a measurement of the excess return over the risk-free rate relative to standard deviation to determine the reward per unit of risk. Tracking Error is the annualized standard deviation of the differences between the portfolio and index returns.

Aristotle Capital Boston, LLC is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Aristotle Boston, including our investment strategies, fees and objectives, can be found in our FormADV Part 2, which is available upon request. ACB-2306-29


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